To listen to the Tory leadership candidates, once they have “delivered Brexit” they’ll be able to cut taxes, invest in public services, enact business- and enterprise-friendly policies and maintain fiscal discipline at the same time. We really will be able to have it all.
A fantasy? Another example of Conservatives magical thinking?
Up to a point. The menu they’ve offered is something from which they could at least pick and choose their favourite dishes with the assistance of a strong economy, as long as they’re prepared kick the can of dealing with an ageing population down the road (again). They’ll almost certainly do that.
We’ll tell you what’s true. You can form your own view.
From
15p
€0.18
$0.18
USD 0.27
a day, more exclusives, analysis and extras.
Trouble is, as the British Chambers of Commerce makes clear this morning, Britain is highly unlikely to have a strong economy even if, and it’s apparently a big if judging by what some of the main contenders have said, a Brexit deal is ultimately done.
The BCC has, it’s true, slightly upgraded its 2019 growth forecast from a pedestrian 1.2 per cent to 1.3 per cent, which still rather leaves Britain spluttering along the hard shoulder, probably in an imported car given the way our own motor industry is going.
However, it has significantly pared back its expectations further on out, slashing its 2020 forecast to just 1 per cent from 1.3 per cent and its 2021 number from 1.4 per cent to 1.2 per cent.
The explanation? The modest increase to the 2019 number comes almost entirely from firms’ Brexit stockpiling.
A disturbing number of them have made little in the way of preparations for a no-deal crash out, as referenced by the Institute of Directors on Friday. A survey of businesses it conducted found about half had either not enacted contingency plans or weren’t planning any. This is partly because many smaller businesses simply lack the resources to do so.
But those that have engaged in building up supplies have done so with gusto. As a result, inventory levels are now at historic highs.
This build-up has driven a boost to economic growth this year but there will be a reduction in future years as they are unwound at a time of pitifully weak business investment, which is a consequence of the uncertainty the government has created.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
The BCC says that will “suffocate investment activity over the near term”.
Trade and exports are also expected to be hit as Britain transitions out of the EU (assuming it does). What growth there is will, once again, be dependent upon the resilience of British consumers. Their wages have been rising of late, which is a welcome development, but they’ve been understandably reluctant to spend them because they too are very wary about the no-deal posturing indulged in by the likes of Boris Johnson.
It should be noted that all of the BCC’s forecasts are dependent on the UK agreeing to a Brexit deal: without one, the fairly gloomy picture the organisation paints will have to be reassessed in a sharply negative direction.
The prime ministerial aspirants badly need the economy to help them make good on the promises they’ve been making. It doesn’t look likely it’s going to offer them much in the way of support.
